The Constitution Bench of nine judges has been hearing the arguments every week on the constitutionality of levy of Entry Tax since 19 July 2016. In continuation of our earlier update we bring to you the highlights and issues discussed at the hearing of the matter. During the third week arguments were made by various advocates appearing on behalf of the assessees were completed and Ld. Attorney General, Mr. Mukul Rohatgi made submissions on behalf of the Union of India. This note highlights the key submissions made so far.
Key submissions of Mr. Lakshmikumaran
Mr. Lakshmikumaran, advocate appearing on behalf of the assessees, made his brief submissions before the Bench. He attempted to highlight the General Agreement on Trade and Tariff (GATT) and World Trade Organisation (WTO) regime. However, he was asked to limit his arguments to the Constitution of India and related provisions. His key submissions are as under:
2 Refer to earlier update for complete submissions of Mr. Harish N. Salve
Key submission of Mr. Jagdeep Dhankar, Senior Advocate
Mr. Dhankar, appearing on behalf of one the assesses, argued that Part XIII of the Constitution of India must be considered as a part of the basic structure, which has been inserted to preserve the economic unity of the nation. He also argued that compensatory taxes have Constitutional basis. Taxes can be levied by a State only in terms of Article 304 (a), i.e., only on goods being imported from other States, if similar goods are produced or manufactured within the importing/taxing State. The said provision envisions protection of goods of importing States by a levy of a neutralizing tax and does not restrict movement.
Submissions by Mr. Ravindra Srivastava, Senior Advocate
Mr. Srivastava's submissions on behalf of the assessees mirrored Mr. Salve's submissions.2 His key submissions are as under:
3 'Branch Office' Refer to earlier update
be read down since the principles of Constitutional interpretation do not permit an interpretation, which is likely to render an express provision otiose.
Key submissions of Mr. Venkataraman, Senior Advocate
Mr. Venkataraman, appearing on behalf of the assessees, argued on the matter with the background of the GST. He submitted that the proposed Article 246A. (Part of the proposed 122nd Constitutional Amendment) indicates the evolution of the convergence theory. The theory envisions a single taxation regime being imposed by the Union as well the States and brings about fiscal unity in the nation. The GST regime will empower the States as they have a wider tax net and power to tax the entire supply chain. An adverse judgment by this Court will disrupt the entire GST process.5 His key submissions on merits are as under:
4 (1961) 1 SCR 809
Submissions by Mr. Dhruv Aggarwal, Senior Advocate
Mr. Aggarwal appeared on behalf of the assessees and made his separate submissions on various issues arising in the matter. Following are his key submissions:
5 Please note that these submissions were made prior to the passing of the GST Bill in the Rajya Sabha
6 State of Punjab v. Devans Modern Breweries,(2004) 11 SCC 26
Submissions of Mr. Gopal Jain, Senior Advocate
Mr. Jain appeared on behalf of the assessees and made the brief submission that the Constitution must be read as a whole. No provision of the Constitution can be ignored and one part does not supersede another unless expressly stipulated. The proviso is inserted to ensure certainty, unity and stability. The President uses his independent mind to scrutinize State legislations, which affect freedom of trade and commerce. He also submitted that there is a need for certainty in tax laws and therefore, decisions which have stood the test of time should not be interfered with.
7 Shree Mahavir Oil Mills v. State of J&K , (1996) 11 SCC 39
Submissions of Ms. Suruchi Agarwal, Advocate
Ms. Agarwal appeared on behalf of assessees. The key submissions made by him are as under:
Mr. Rohatgi (AG) presented the case of the Union of India. His key submissions are as under:
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